The question on Wall Street
in the wake of the latest meltdowns in the U.S. financial sector is
"Who's next?" The more important issue is not which of the major banks
or investment firms will follow Lehman Brothers into bankruptcy or
Merrill Lynch into fire sale. Rather, the question should be "What's
next?"

After all, the problem afflicting so much of the U.S. capital
markets - and, therefore, those around the world - is not one of
individual corporations hitting a rough patch and requiring bail-outs
from the federal government or the private sector. It is, instead, the
result of a reckless disregard for sound investing practices in the
unscrupulous pursuit of profit. In a word, the last "what" was
"subprime."

As we all know by now, the practice of building financial houses of
cards on various investment instruments based in nontransparent and
problematic subprime mortgage-backed securities was a formula for
disaster. It induced firms that not only should have known better but
are required to behave better to perform unconscionably. In the
process, they violated industry standards and government regulations
with respect to transparency, disclosure, due diligence, good
governance and accountability.

Tragically, in the process of leaping out of the scalding subprime
frying pan, Wall Street is heading directly into a fire that promises,
if anything, to be more devastating than the present disaster.
Incredibly, it bears all the hallmarks of subprime with respect to a
lack of transparency, a systematic failure to disclose and an utter
absence of due diligence, good governance and accountability. The next
"what" is called Shariah-Compliant Finance (SCF).

Shariah, of course, is the term the Islamists use to describe the
ruthlessly repressive, totalitarian program they believe should govern
every aspect of the lives of faithful Muslims. It is also the
instrument they intend to use to rule the world. The first clue that
something is wrong with Wall Street's next big thing is that it is
Shariah-compliant.

The next clue is how Shariah-Compliant Finance works. Like subprime,
it is a black box, in which management and investors alike are told to
trust in the experts. In this case, the experts are Shariah authorities
who are accorded exclusive responsibility for determining whether
investments are "pure" (halal) and therefore acceptable, or "impure"
(haram) and not.

As an important monograph on the subject recently issued by the McCormick Foundation and the Center for Security Policy
(for copies contact the Center at www.SecureFreedom.org) makes clear,
these authorities are, unsurprisingly, adherents to Shariah. A number
of them explicitly embrace its call to jihad (including a former senior
member of the Dow Jones Islamic Index, Sheik Taqi Usmani). This "holy
war" is to be waged where possible through violent means, where
necessary through "soft" means like Shariah-Compliant Finance. For this
reason, such Islamists call SCF "financial jihad."

Earlier this year, David Yerushalmi, a litigator specializing in
securities law and an expert on Shariah, produced a riveting legal
memorandum (soon to appear in the University of Utah Law Review)
examining the civil and criminal exposure inherent in Shariah-Compliant
Finance
(http://www.centerforsecuritypolicy.org/Modules/NewsManager/Center%20publication%20PDFs/Shairias%20Black%20Box%20(D%20Yerushalmi).pdf).
His conclusion: banks and investment houses offering SCF products may
be enabling or engaging in the following: racketeering, antitrust
activity, securities fraud, consumer fraud and/or material support for
terror.

What makes Shariah-Compliant Finance even more dangerous than
subprime is that, in its effort to legitimize and institutionalize
Shariah in America, it is advancing a criminal conspiracy whose purpose
is the violent overthrow of the United States Constitution and government in favor of Islamic rule. That would make it sedition.

For these reasons, we should be especially wary of the purported silver
lining to the current Wall Street crisis: the infusion of vast
quantities of petrodollars, primarily from the Organization of
Petroleum Exporting Countries' Saudi Arabia and other Islamist nations
in the Persian Gulf. It is bad enough that these putative rescuers of
our subprime-fueled liquidity debacle are buying up engines of our
capital markets for pennies on the dollar. Worse yet, they are, in the
process, putting themselves in a position to promote Shariah-Compliant
Finance and the seditious theo-political agenda it serves.

A forthcoming book about SCF by Center for Security Policy Vice
President Alex Alexiev offers a further, sobering thought about the
fire next time: It is becoming ever-harder to differentiate between the
Gulf states' so-called Sovereign Wealth Funds (actually they are the
slush funds of the sovereigns) and Shariah-Compliant Finance. The
former is increasingly being invested in ways that promote the latter,
adding unfathomably large pools of funds to what is estimated already
to be an $800 billion global industry.

The Center for Security Policy has sent copies of David Yerushalmi's
legal memorandum to the heads of scores of Wall Street firms and the
nation's leading commercial banks, warning them of the ominous
similarities between subprime and SCF. Interestingly, only the late
Merrill Lynch bothered to respond, albeit with a vacuous note blithely
affirming its concern about terrorism.

Fortunately, Congress is beginning to recognize the possible peril
in what may happen next to Wall Street. Notably, last month, a senior
and highly respected member of the Senate Finance Committee, Arizona
Republican Jon Kyl, wrote Securities and Exchange Commission Chairman
Chris Cox, Federal Reserve Chairman Ben Bernanke, Treasury Secretary
Henry Paulson and Attorney General Michael Mukasey, asking them to
respond to Mr. Yerushalmi's analysis of Shariah-Compliant Finance.

The question occurs: Will they encourage or discourage the capital
markets' leap into the fire via a headlong plunge into subprime on
seditious steroids?

Frank J. Gaffney, Jr. is the founder, president, and CEO of The Center for Security Policy. During the Reagan administration, Gaffney was the Assistant Secretary of Defense for International Security, the Deputy Assistant Secretary of Defense for Nuclear Forces and Arms Control Policy, and a Professional Staff Member on the Senate Armed Services Committee, chaired by Senator John Tower (R-Texas). He is a columnist for The Washington Times, Jewish World Review, and Townhall.com and has also contributed to The Wall Street Journal, USA Today, The New Republic, The Washington Post, The New York Times, The Christian Science Monitor, The Los Angeles Times, and Newsday.

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